Annual Revenue per CDN Customer

An article published by Barron’s stated that Akamai has 5,000 customers. The new data point allows me to update my previous estimate, in order to calculate the annual revenue per customer; then compare the metric across four CDNs, to see how each one fares against the other. The chart below displays the annual revenue, and number of customers for Akamai, Limelight, EdgeCast and CloudFlare. The Limelight data point is the most accurate, since their revenue, and number of customers is published in the 10-Q. The second most accurate data point is Akamai, followed by EdgeCast, and CloudFlare.

CDN

Annual Revenue

# of Customers

Revenue/Customer

Akamai

$1.5 Billion

5000

$300000

Limelight

$200 Million

1341

$149000

EdgeCast

$100 Million

6000

$16600

CloudFlare

$100 Million

1.5 Million

$66

Based on the chart above, Akamai has the highest annual revenue per customer, no surprises there. Then Limelight, EdgeCast, and CloudFlare, in that order. Limelight and EdgeCast are doing extremely well, considering they’ve been around for a much shorter period of time, compared to Akamai.

The annual revenue for CloudFlare is my best guest. The CloudFlare revenue per customer is extremely low, which fits their business model perfectly. Their main competitor is Amazon, not Akamai, EdgeCast, or Limelight. One takeaway from the chart above, just because you’re in the CDN business, more customers doesn’t equate to higher annual revenue.

CDN pricing and new customer acquisition is a balancing act. For a new CDN, the best formula is to build a customer base of about 1,000 to 10,000 clients, that pay higher annual revenues; then acquiring 100,000 customers paying a few hundred dollars per month.